KUALA LUMPUR: AmInvestment Bank Bhd has maintained a “impartial” call on the automobile sector on anticipated normalising demand amid mounting international change (foreign exchange) pressures as seen within the first quarter of 2024 (Q1’24).
It mentioned complete business quantity (TIV) is projected to stabilise to historic norms this yr.
“The well being of automotive gross sales stays sturdy in Q1 2024 with a progress of 4.4% year-on-year. This is regardless of the accelerated gross sales earlier than the expiration of the gross sales and repair tax exemption at end-March final yr.
“While TIV in Q1 2024 is healthier than anticipated, we imagine this stems from clearance of backlog orders from late-2023 and pre-Chinese New Year orders; therefore, the TIV will taper down in subsequent quarters as demand normalises to historic norms,” it mentioned in a sector replace observe.
Meanwhile, AmInvestment Bank has expressed a combined outlook on the auto market on the again of recent mannequin launches in Q2’24 onwards, unstable foreign exchange and the approaching gasoline subsidy rationalisation.
It mentioned there have been many new fashions launched in Q1’24 with the bulk being Chinese-made electrical autos and some typical inner combustion engine fashions.
“There shall be considerably extra new mannequin launches going ahead, particularly for KIA, Mazda and Peugeot.
“Some marques are increasing present fashions with hybrid choices (Toyota and Honda) which have confirmed to be well-liked; living proof is the Toyota Cross Hybrid model’s good take-up charge of 40%,” it mentioned.
The funding financial institution mentioned the important thing issue to look as much as is the federal government’s plans to rationalise the gasoline subsidy by June, because the quantum of worth enhance will vastly affect client shopping for patterns.
“A weak ringgit is usually dangerous for Malaysian autos as many elements and components are imported primarily from Thailand, Japan and South Korea, and they’re usually denominated within the US greenback, South Korean received or Japanese yen.
“The auto firms usually hedge their foreign money positions by shopping for three to 6 months ahead, assuming the swap charges are beneficial,” it mentioned.
Bermaz Auto Bhd (BAuto) and MBM Resources Bhd (MBMR) are benefitting from the weakening Japanese yen towards the ringgit, whereas Sime Darby and Tan Chong Motors Holdings Bhd (TCM) are negatively affected by the weakening ringgit towards the US greenback and Australian greenback.
AmInvestment Bank famous that the auto sector’s year-to-date 2024 efficiency has been combined with a mean share worth acquire of 4.5% along with stable features by MBMR’s 21% and Sime Darby Bhd’s 18%.
“BAuto and DRB-Hicom Bhd are each flat and TCM is down by 16%.
“Valuations are balanced, apart from BAuto which stays our sole purchase,” it added. – eNM
